It's an SD-WAN party, as everybody chases the billions of dollars in market value that Futuriom believes is being created.

Nuage's SD-WAN 2.0 was the biggest announcement of the past week and it has the potential to escalate competitive dynamics of the SD-WAN market, especially among the big players. The company has fully integrated SD-WAN with Nuage's datacenter virtualization services platform (VSP) and Virtual Networking Services (VNS). This means it can manage virtualized networks that extend out from the datacenter to the SD-WAN, connected by an X86-based customer premises equipment (CPE) on the edge.

This is important because enterprises and service providers are looking for a way to create powerful virtual networks across a wide range of networks and clouds. The only rival to Nuage in having such an extensive end-to-end virtualization platform is VMware, which is integrating its NSX datacenter virtualization platform with the VeloCloud SD-WAN acquisition. But Nuage also has the hardware piece, with its connections to Nokia's routing and switching technology.

Cisco, VMware, Nuage Fight

Even though there are dozens of players in SD-WAN, it's the "big three" that need to be watched closely because of their positions in datacenter (DC) virtualization capabilities. SD-WAN is an extension of DC virtualization out to the edge. Cisco, Nuage, and VMware -- all big players in datacenter virtualization -- are now moving quickly to tie in SD-WAN.

With the world quickly moving to multi-cloud networks, the capability to virtualize a network, which can create software based secure tunnels across clouds and data, will be a key functionality. IT managers want to create networks on the fly, without having to worry about manual configuration of hardware. They also want the flexibility to be able to manage networks with software. This is why integrating DC virtualization to an SD-WAN platform will be important. It's also what's spurred Cisco and VMware to make strategic SD-WAN acquisitions and race to integrate them (Cisco bought Viptela and VMware bought VeloCloud).

Unlike Cisco and VMware, Nuage's moves have been focused on internal development. Nokia created Nuage to be the virtualization expert. Its VNS is considered best-of-class virtualization for the DC, and it's a legitimate rival to VMware's NSX, which leads the market. Cisco has made progress with Applications Centric Infrastructure (ACI) initiative, but it's still seen by many end users as an expensive proprietary solution, according to Futuriom primary research with customers.

Fully Featured Routing CPE

Ground zero of the SD-WAN battle is the so-called CPE, which can be built into a cheaper, more standardized version of a router. In fact, the entire concept of SD-WAN is grounded in the concept of taking a commercial off-the-shelf (COTS) hardware solution based on the x86 compute platform, and then plugging it into smart software that can control routing, connectivity, and applications intelligence from the cloud. These standard boxes can then be deployed to enterprise branch offices, pizza outlets, or retail outlets like gas stations and then managed from afar, rather than requiring more expensive network technicians.

That's the allure of SD-WAN in a nutshell -- standardize and simplify, then manage from the cloud to push out software and services and reduce operations cost.

The differentiation in SD-WAN will come down to the functionality that can be deployed at the edge and how well it integrates with a system that can virtualize everywhere -- in the DC, across clouds, etc.

Nuage has done a great job of focusing on delivering a powerful CPE called the NSG. This includes carrier-grade routing features, such as the handling of Border Gateway Protocol (BGP) and LAN peering, which enables service providers or large enterprises to connect disparate networks into the virtualization system using standard routing protocols. The NSG also has many built-in security functions such as an integrated next-generation firewall and layer 7 applications visibility.

This is a distinctly different approach from Cisco. Cisco is still seemingly router focused, rather than CPE-focused, as demonstrated by its recent announcement of the integration of Viptela into its own router portfolio and an operating system known as IOS XE. This has raised questions about its commitment to using an industry-standard CPE box, which delivers simplicity to the end users and can save on hardware cost. End users have been steadfast in telling Futuriom they think that reworked proprietary router solutions are too expensive. It appears to me that Cisco is using SD-WAN to layer on more software and license value onto its routers -- a revenue-boosting sales play.

In addition -- Cisco is still using two management interfaces in its SD-WAN approach with Viptela. You still need one management interface for a Cisco router of ACI system and another for a Viptela network. Nuage has integrated its VNS and SD-WAN 2.0 management.

Virtualization Land Grab

Nuage doesn't seem to have grabbed as much attention as the big players such as Cisco and VMware or even some of the hot startups, which have included companies such as Silver Peak, Viptela, VeloCoud, and Versa Networks. But now it has all the pieces. It has quietly tied a powerful NSG edge box into the management system of VNS. It's also got a full suite of service provider and enterprise customers.

Some of the customers that Nuage has announced for SD-WAN 2.0 include Banco Multiva, Cogeco Peer1, Credit Andorra, Etisalat, e-Qual, Globe Telecom, NTT Com India, Orange X, Telefonica, UPMC, and Vertel, in addition to over 50 service providers world-wide that have selected Nuage Networks VNS for their managed SD-WAN offering.

Meanwhile, as witnessed, by the VMware announcement with Microsoft, the SD-WAN technology trend is not going to slow down anytime soon. Microsoft's deals with companies such as VMware and Riverbed demonstrate the power of hooking SD-WAN into cloud services, to add the capability to build secure virtual networks across clouds. It's clear that the SD-WAN space is becoming a focus for multi-cloud networking.